I should say at the outset that I write out of a concern for fairness, openness and equality in the government's land dealings...
In 1973, SA premier Don Dunstan formed the SA Land Commission, intending it to make available government land ‘to those members of the community who do not have large financial resources’.
Further, ‘The commission shall not conduct its business with a view to making a profit’, declared the 1973 legislation passed by both houses of parliament.
Dunstan did not want the Land Commission to become a profit-driven entity or let it get too close to the development industry.
As the years went by, both the enabling legislation and the intentions of the Land Commission drifted from Dunstan’s vision. The legislation backing the Land Commission was subtly changed to allow the commission to seek profits for the government. The Liberal Tonkin and Brown governments began this process, and the rann government has enthusiastically continued the trend.
Land was sold to developers in private deals. The government became a ‘joint venture partner’ with developers to whom it gave access to land that the public did not.
Far from keeping the price of land low, it was in the interest of the now Land Management Corporation and its owner to keep land prices high.
It is now government policy that LMC makes money for the government.
From making no profit at its inception, in 2004 the LMC paid the government $34 million out of its profits. Its last publicly available report showed a profit of $100 million, of which $36.4 million was paid to the government from the pockets of SA home buyers. This year, with the Port Adelaide joint venture on stream, LMC will pay the government $61 million.
Any bonuses paid to LMC’s managers are not made public.
While building costs in real terms have barely increased since 1973, the cost of land has spiraled.
“Figures show that the price of land is the key to housing prices. The average cost of building a new house 35 years ago was $97,000, expressed in 2008 dollars. Today it’s virtually the same at $102,000. The unaffordability is in the land component.
In the 1960s through to the 1980s, the median Adelaide house price was three times the average annual wage. Today, a house and land package costs six times the average yearly wage. The price of building the house itself is practically unchanged.” - Independent Weekly 26/7/08
In 1973, the government’s Land Commission was selling serviced building allotments in development areas on Adelaide’s fringe for an average of $16,000 in today's money!
Equivalent blocks now cost in excess of $160,000 (to private buyers, not to large developers). A tenfold increase, due to restricted supply. And LMC controls supply of vast tracts of this type of land. So a fringe block of land which used to cost half the price of a Holden now costs 5 times the price of a Holden. The price of land has also risen dramatically in relation to earnings. Hence the unaffordability factor, making Adelaide the least affordable of Australian cities for housing. The government is keeping it that way.
The property industry benefits, the government benefits, and the index of housing affordability creeps ever upwards.
The ‘directors’ of ‘SA Inc.’ – Rann, Foley, Conlon et al, stand very close to the development industry. Whether they are too close should be examined, in the public interest.
Check out the thread at:
http://www.sensational-adelaide.com/for ... f=4&t=2243
for some startling affordability facts and figures.